I was in the checkout line today at Wallmart and I happened to overhear a twenty something young woman complaining to her friend (at least I think the other girl was her friend)that she had to take a cab to work because her car had broken down and she had no money to fix it. I was slightly perplexed by this statement as I wondered why she didn't use a credit card or her emergency savings to cover the costs of repairing her ride. Apparently her friend was too because as soon as the thought went through my head, her friend verbally asked the corresponding question. The young woman responded that she was trying to avoid credit cards at all costs and thought that saving money for emergency uses was something that didn't need to be done until she was "older".
While I applaud her efforts to stay out of revolving credit card debt, the assertion that you need to be "older" to save for emergencies only revealed to me her immaturity. Unfortunately, if you have accumulated eighteen or more years on this earth, then you are officially "older" and unless you have parents to bail you out in the event of a financial emergency, an emergency savings fund is the FIRST thing you should consider adding to your financial repetoire.
How much exactly? Most personal finance experts that I have read recommend having a goal to save up three to six months of one's salary for emergencies. Because you're in college, you might have very limited cash flow or none at all (although in the event of the latter, you probably don't think about personal finances anyway). In any case saving is still very important and you should put away what you can. Maybe make a goal to put away ten to twenty percent of every bit of income you get. I doesn't matter where you put it initially just so long that you set it aside and DON'T TOUCH IT except for in the event of emergencies. Just doing this will put you miles ahead of your friends who don't and will lay a solid foundation for your financial future to come (not to mention keep your ride on the road when it inevitably breaks down).
The Important but Overlooked Aspect of Saving
July 28th, 2007 at 10:41 pm
July 28th, 2007 at 11:55 pm 1185666949
July 29th, 2007 at 12:49 am 1185670173
As for having a car in college, scfr, I'd disagree in some respects. My freshman year, I didn't have a car and I was quite miserable. I'm a very active person who likes going places, seeing new things, exploring my surroundings, etc. Being cooped up on campus was driving me nuts. There was a grocery store in walking distance and a couple of restaurants, but that was about it. Without a car, I couldn't go to the mall or the flea market or drive up along the mountain path near campus or eat at any other restaurants or do a dozen other things that I'm used to doing. Going home for the weekend meant calling a cab to take me to the bus terminal and then having my parents have to pick me up at the terminal which was about 30 minutes from home.
Once I got a car at school, the depression lifted. When I felt burned out or needed a break, I could shoot over to the mall. On the weekends, I could stroll through the flea markets and antique shops. I could go out to eat with friends or go to the movies. And I could be home in just over an hour door to door.
Did I NEED a car? Could I survive without one? Yes. But very unhappily.
August 21st, 2007 at 01:53 am 1187661201